Newcomers up for Tough Competition in the Agent Space

From new phones with endlessly expanding capabilities (digital camera, turn-by-turn navigation) to new functions one can perform from their device (set my DVR to record the latest episode of House), the world of wireless products and services never ceases to amaze me.  As our wireless phones continue to morph into versatile "do-it-all" gizmos, the options for purchase continue to change as well.

Agent sites (i.e. independent, 3rd party retailers) are not new to the wireless scene. LetsTalk and Wirefly have long been a destination for wireless shoppers seeking better deals than what traditional wireless service provider websites had to offer. However, recently companies like Dell and Amazon, who previously focused much more on consumer electronics rather than mobile devices, are now aggressively, and arguably with some success, pushing into the wireless space. Retail powerhouses like Wal-Mart and BestBuy have had online wireless stores for awhile, but their overall renewed focus on wireless products is a fairly recent phenomenon.

In the past 6 months, Amazon launched a new online store (wireless.amazon.com) focused solely on wireless products/services (however, to be fair, wireless products have been available for purchase from Amazon’s main website for quite some time).  Dell followed suit with a wireless-products-only site coined Dell Mobility (mobilily.dell.com).  In addition BestBuy, RadioShack and Wal-Mart are putting considerable advertising dollars behind their efforts to attract shoppers to mobile phones/services offers being offered.

Looking at the data we see that there is an upward trend of shoppers employing multiple online sources when shopping for wireless phones/services.   The chart below is indicative of this cross-shop behavior, or rather, the average volume of wireless shoppers using both Agent sites and Carrier sites in a given quarter.  Agents’ efforts around generating trust among shoppers (e.g. featured customer reviews, "about us" sections, Wirefly’s "Our Promise" section) also seem to be proving successful,  as only a small percentage of online wireless shoppers reported trusting carrier websites more than Agent websites (from Compete survey data).

  • The volume of wireless shoppers who visited both Carrier and Agent sites has increased by 20%, compared to a year ago
  • About 8% of Big-4 wireless site visitors now cross-shop agent sites in a given month (compared to slightly over 5% in Q3 ’08)

Some of the newcomers made impressive strides in the space (e.g. Amazon’s traffic more than doubled over the past quarter) but they still have to face rather tough competition from the incumbents in the wireless Agent space: Simplexity (with its flagship Wirefly website) and LetsTalk.  The charts below shows quarterly traffic and order share on the wireless sections of these sites.

***Note: Wirefly traffic and orders are limited to Wirefly.com domain, LetsTalk traffic and orders are limited to LetsTalk.com domain, Wal-Mart’s Wireless online store is operated by LetsTalk

CellStores’s BestBuy’s, Dell’s, RadioShack’s Wireless online stores and Wirefly website are operated by Simplexity

  • With the highest traffic and share of orders, Simplexity’s Wirefly remains Best-in-Class among Agent sites
  • After a great holiday season Wirefly’s online orders went up over 60% Y-O-Y.
  • As for LetsTalk, while its traffic and order share is smaller compared to Wirefly, it continues to maintain the highest conversion rate in the category (average of 3.9% over the course of 2009).

It seems that aggressive marketing, through both offline and online ads, e-mail campaigns, along with rock-bottom prices and limited-time "not-available-anywhere-else" offers remain key success factors in the Agent space. With Wirefly and LetsTalk firmly occupying top position among Agent sites, the newcomers need to offer something extra to gain shoppers attention. One thing is clear: the ensuing battle could prove to be a treasure trove for savvy shoppers.